“At Risk” Customers

Do you know who your “at risk’ customers are?

Unless you have a remarkable and highly relevant new business model—or have a retail concept that allows you to open multiple new units every year—the majority of your profits will come from existing customers.

Each year most businesses lose substantial revenue from customers that defect.   Of course any customer-centric company should track customer defection rates, understand their root causes and take action to improve customer retention rates.

This is helpful and essential analysis.   But it is also a look in the rear-view mirror.   What is especially powerful is identifying customers that are at risk of defecting and taking proactive action to retain the ones you wish to keep.

A basic step is to monitor decreases in spending activity among key customer segments—you do have an actionable customer segmentation right?—such as overall purchase frequency, change in duration between purchases, “trading down” to lower price points, shifts in promotional shopping rates.   Other useful metrics involve more subtle engagement indicators such as web browsing rates, email open rates and customer satisfaction/net promoter score changes.

With a “customer dashboard” that is relevant to your business, you can potentially identify at risk customers and take action to save them.  Most of the time it’s a lot easier to retain a customer than to find a profitable new one.

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One thought on ““At Risk” Customers

  1. Hey Steven,

    I came across your blog via Twitter. I think your concept of at risk customers can be extremely valuable to businesses. However, as you and I both know, not everyone openly shares their feelings about a particular business. Your suggestion of focusing on decreased spending is a great way of getting around customers who are unwilling to share their beliefs.

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